Arrow Electronics (ARW) investor relations material

Executive summary

• Second-quarter 2026 revenue reached $10.0 billion, up 32% year-over-year, surpassing guidance, with Global Components up 39% and ECS up 14%.

• Non-GAAP diluted EPS was $5.45, up 124% year-over-year, and GAAP EPS was $5.26, both above guidance.

• Operating margin expanded 120 basis points year-over-year to 4% (non-GAAP), with strong operational momentum and improved leading indicators.

• Growth was driven by broad-based demand, especially from AI, cloud, cybersecurity, and infrastructure software.

• Backlog and book-to-bill ratios remain strong, providing visibility into continued growth into 2027.

Financial highlights

• Net income attributable to shareholders rose 45% year-over-year to $273 million (GAAP), with non-GAAP net income at $283 million, up 122%.

• Non-GAAP operating income was $403 million, up 87% year-over-year; operating income for the quarter was $377 million, nearly doubling from a year ago.

• Gross margin for Q2 was 11.3% (up from 11.2% year-over-year); Global Components margin rose to 11.6%, ECS margin declined to 10.2%.

• Operating cash flow was $318 million for the quarter and $1.02 billion for the first half of 2026.

• Share repurchases totaled $43 million in Q2; $956.9 million remains authorized.

Outlook and guidance

• Q3 2026 consolidated sales expected between $9.60 billion and $10.20 billion, with non-GAAP diluted EPS guidance of $4.83–$5.03.

• Global Components Q3 sales guided at $7.5–$7.9 billion; ECS at $2.1–$2.3 billion.

• Average tax rate projected at 23–25%; interest expense around $50 million.

• Foreign currency expected to reduce Q3 sales by $27 million and EPS by $0.01 year-over-year.

• Management expects continued AI-driven demand but notes uncertainty due to geopolitical and economic factors.